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    Audit Trail and Auditors

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    Please help with the following problem.

    What is the meaning of audit trail, and why is it necessary for the audit process?

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    Solution Preview

    In terms of auditing work completed by CPA firms preparing financial statements for clients, the audit trails through the financial records of a company are essential to be able to perform substantive tests of client records. Following are two examples:

    1. In the accounts receivable detail records, the auditor reads an entry which says 'credit balance due from customer'. A good audit trail would provide a reference back to a credit memo or an invoice to allow the auditor to examine source documents that would explain and substantiate the entry.

    2. In reviewing the asset ...

    Solution Summary

    The solution explains what an audit trail is and how it is used in independent audits of companies. Two examples are given to demonstrate the problem with a lack of a good audit trail. Also included in a short article about computer audit trails. Information about using audit trails in cybercrime is mentioned.